It looks like the ironic outcome of the BP mess will come in the form of a truly poetic gesture that involves a middle finger offered by BP's treasurer to British and American taxpayers. The Financial Times reports that "BP is forecast to pay about $10bn less tax over the next four years as it meets the costs of its huge oil spill in the Gulf of Mexico, hitting the revenues of Britain and the US that receive hundreds of millions of dollars from the company each year." Because the laws of both the US and the UK allow companies to deduct from their taxes what are called "business expenses" - and don't include excemptions that exclude from those normal business expenses things like cleaning up messes caused by doing business the wrong way, cutting corners and violating environmental laws - BP will transfer about a third of all their costs of dealing with the Gulf of Mexico oil disaster away from the company and directly onto the taxpayers of the US and the UK by deducting all these costs from their taxable profits. The company could well end up paying no income taxes at all, possibly even for several years, even though it's selling billions of dollars of oil and oil products and making billions in profits all over the world. The easy solution is for both the US and UK to amend their tax laws to stop letting companies deduct illegal activities or those things that result from failure to comply with industry or government standards. That easy solution, though, probably won't happen because BP and other oil companies also spend hundreds of millions of dollars bribing - er, lobbying - members of Congress, thus preventing such changes in the tax laws. And, like the cost of cleaning up the oil spill, their lobbying costs are also tax-deductible as business expenses, meaning that you and I are paying up to a third of those costs.
Did BP Just Give the Middle Finger to All Taxpayers?
Jul. 13, 2010 8:18 am